Thailand's baht has dropped the most for three months on speculation the central bank will intervene to slow the pace of gains that may hurt exports. Government bonds were little changed.
The baht has rallied 6.2% against the dollar this year, the most among Asia's 11 most-traded currencies. It has started to move beyond its fundamentals, central bank governor Prasarn Trairatvorakul said April 19, while Assistant Governor Paiboon Kittisrikangwan said on Monday the baht has risen "too much and too quickly." The US dollar's 14-day relative strength index has been below 30 since April 16, the threshold that suggests to some traders the baht's gains have been excessive.
"A sharp appreciation is hurting exports, while those central bank comments are causing concern about possible intervention," said Hideki Hayashi, a researcher at the Japan Center for Economic Research in Tokyo. "There must be some profit-taking from the baht’s recent gain as well."
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